Mercari (4385) AI Stock Analysis

• Market Cap: ¥606.27B
• Dividend Yield: N/A
• Average Volume (3M): 3.05M
• Price to Earnings (P/E): 20.6
• Beta (1Y): 0.57
• Revenue Growth: 4.83%
• EPS Growth: 106.29%
• Country: JP
• Employees: 2,080
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Specialty Retail
• EPS (TTM): 33.98
• Shares Outstanding: 164,970,110
• 10 Day Avg. Volume: 3,724,380
• 30 Day Avg. Volume: 3,051,140
• PEG Ratio: 0.18
• Price to Book (P/B): 4.42
• Price to Sales (P/S): 2.28
• P/FCF Ratio: -35.84
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: ¥3,531.67
• Price Target Upside: 20.45% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 159.41
• Revenue Forecast (FY): ¥212.33B

• Rating: 63 Neutral
• Price Target: ¥3,799.00 ▲(29.57% Upside)
• Action: Downgraded Date: 02/11/26
• Date: Action: Downgraded 02/11/26

The score is primarily constrained by weak cash generation (negative operating and free cash flow) and elevated leverage despite strong margin recovery. Technicals are supportive with a clear uptrend and positive momentum, while valuation appears reasonable at ~18x earnings but lacks dividend support.

Positive Factors

Margin recovery

Sustained improvement in gross and operating margins indicates durable unit economics and stronger pricing or cost control. High gross margin (~73%) gives latitude to absorb marketing or product investments while operating margin expansion supports long-term profitability and reinvestment capacity.

High returns on equity

ROE near 30% shows the business converts equity into profits efficiently, reflecting strong operational leverage and profitable core operations. Over time this supports reinvestment, potential organic growth funding, and signals management effectiveness in allocating capital.

Platform + fintech ecosystem

A combined C2C marketplace and payments service creates multiple monetization levers (take rates, payment fees, value-added services). Network effects and cross‑sell between marketplace and Merpay enhance user stickiness and diversify revenue beyond single-product dependence.

Negative Factors

Negative cash generation

Consistent negative operating and free cash flow means reported profits are not converting to cash, raising funding and quality-of-earnings concerns. Over months the company may need external financing for growth or operations, constraining capital allocation and increasing liquidity risk.

Elevated leverage

High leverage reduces financial flexibility and raises interest and refinancing risk, especially given negative cash flow. Over the medium term, elevated debt amplifies sensitivity to earnings or funding shocks and limits ability to invest in product development or tuck-in opportunities.

Decelerating revenue growth

Top-line momentum slowing to low single digits weakens the leverage of fixed costs and limits absolute profit growth despite margin gains. Structural revenue deceleration reduces runway for network effects and may pressure the company to raise fees or cut investment to sustain profits.

Mercari Business Overview & Revenue Model

Company Description

Mercari, Inc. engages in the planning, development, and operation of the Mercari marketplace applications in Japan and the United States. Mercari, Inc. was incorporated in 2013 and is based in Tokyo, Japan.

How the Company Makes Money

Mercari generates revenue primarily through transaction fees charged on sales made through its platform. When a seller lists an item and successfully sells it, Mercari takes a percentage of the sale price as a fee, which typically ranges from 10% to 20%. Additionally, the company earns revenue from optional services such as promoted listings that help sellers increase the visibility of their products. Mercari also benefits from partnerships with shipping companies that facilitate faster delivery options, enhancing the user experience and encouraging more transactions. The combination of these revenue streams allows Mercari to sustain its operations and invest in further growth and development of its marketplace.

Mercari Financial Statement Overview

Summary

Profitability has improved meaningfully (TTM operating margin ~18.1%, net margin ~14.3%, gross margin ~73%), but this is offset by persistently negative operating and free cash flow (TTM OCF -¥20.2B; FCF -¥21.1B) and elevated leverage (TTM debt-to-equity ~2.17x). Revenue growth has also decelerated materially to low single digits in recent periods.

Income Statement

Profitability has improved meaningfully versus earlier years: TTM (Trailing-Twelve-Months) net margin is ~14.3% and operating margin is ~18.1%, up from low-to-mid single-digit/near-10% levels in prior annual periods, and a loss in 2022. Gross margin remains strong (~73.0% TTM), indicating solid unit economics. The main offset is the sharp slowdown in top-line momentum: TTM revenue growth is listed as 3.844 (materially higher than recent annual growth rates, but the annual trajectory shows deceleration from ~38.6% (2022) to ~16.9% (2023) to ~9.0% (2024) to ~2.8% (2025)).

Balance Sheet

Leverage is the key constraint. TTM (Trailing-Twelve-Months) debt-to-equity is ~2.17x (and above 2x in recent annual periods), which reduces financial flexibility and increases sensitivity to earnings or funding shocks. Offsetting this, equity and assets have grown over time and returns on equity are strong at ~30.5% TTM (up from ~26.3% in 2025 annual and positive since 2023), reflecting improved profitability. Overall, strong returns are tempered by consistently elevated leverage.

Cash Flow

Cash generation is the weakest area. TTM (Trailing-Twelve-Months) operating cash flow is negative (-¥20.2B) and free cash flow is also negative (-¥21.1B), following similarly negative results across most recent annual periods (despite a positive year in 2021). This implies profits are not translating into cash, and the negative operating cash flow relative to net income (coverage is negative in recent periods) raises quality-of-earnings and funding-risk concerns. Free cash flow growth is also volatile and sharply negative in the TTM data.

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	204.73B	192.63B	187.41B	171.97B	147.05B	106.11B
Gross Profit	149.47B	138.26B	129.73B	114.42B	95.14B	81.80B
EBITDA	39.28B	31.62B	20.42B	19.63B	-3.04B	13.06B
Net Income	29.32B	26.11B	13.46B	13.11B	-7.57B	5.72B
Balance Sheet
Total Assets	615.14B	543.76B	501.77B	415.29B	339.86B	262.53B
Cash, Cash Equivalents and Short-Term Investments	159.05B	147.03B	197.31B	204.73B	218.85B	171.46B
Total Debt	240.49B	199.38B	193.31B	160.55B	131.35B	71.15B
Total Liabilities	503.90B	444.12B	429.63B	360.06B	301.87B	222.52B
Stockholders Equity	110.89B	99.27B	71.84B	55.35B	37.68B	39.63B
Cash Flow
Free Cash Flow	-21.13B	-12.25B	-43.49B	-36.40B	-26.89B	2.95B
Operating Cash Flow	-20.24B	-11.95B	-43.34B	-35.82B	-26.22B	3.37B
Investing Cash Flow	-53.34B	-31.36B	-877.00M	-601.00M	-671.00M	6.91B
Financing Cash Flow	48.87B	504.00M	32.09B	25.17B	62.06B	19.77B

Mercari Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2932.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4385, the sentiment is Positive. The current price of 2932 is below the 20-day moving average (MA) of 3437.95, below the 50-day MA of 3282.96, and above the 200-day MA of 2659.07, indicating a bullish trend. The MACD of 97.15 indicates Negative momentum. The RSI at 61.99 is Neutral, neither overbought nor oversold. The STOCH value of 70.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4385.

Mercari Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3093	65 Neutral	¥45.48B	14.84	―	2.19%	17.90%	14.14%
7685	65 Neutral	¥180.42B	33.64	―	0.64%	57.01%	91.03%
4385	63 Neutral	¥606.27B	20.63	31.11%	―	4.83%	106.29%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
4017	61 Neutral	¥1.60B	41.15	―	―	-0.97%	-6.95%
2681	60 Neutral	¥71.57B	12.73	―	1.81%	6.48%	-38.41%

Mercari Corporate Events

Mercari Lifts Full-Year Revenue and Profit Outlook on Strong Marketplace Performance

Mercari has raised its full-year revenue and core operating profit forecasts for the fiscal year ending June 30, 2026, citing stronger-than-expected performance in its marketplace business. The company now projects revenue of ¥210 billion to ¥220 billion, up from a previous range of ¥200 billion to ¥210 billion, and core operating profit of ¥32 billion to ¥36 billion, compared with the earlier forecast of ¥28 billion to ¥32 billion.

Management attributed the upward revision to measures aimed at enhancing the core user experience of its products, particularly in the marketplace segment, which have translated into financial gains faster than anticipated. The improved outlook suggests continued momentum following the prior year’s revenue of ¥192.6 billion and underscores Mercari’s efforts to solidify its competitive standing and profitability in the online marketplace industry.

The most recent analyst rating on (JP:4385) stock is a Buy with a Yen3651.00 price target. To see the full list of analyst forecasts on Mercari stock, see the JP:4385 Stock Forecast page.

Mercari Lifts Full-Year Outlook After Profit Surge in First Half of FY2026

Mercari reported strong results for the six months ended December 31, 2025, with revenue rising 12.8% year-on-year to ¥106.3 billion and core operating profit surging 80.9% to ¥20.2 billion, reflecting improved profitability. Profit attributable to owners of the parent climbed 43.4% to ¥10.6 billion, while total assets expanded to ¥615.1 billion and equity attributable to owners reached ¥110.9 billion, though the equity ratio stayed relatively modest at 18%.

The company maintained a policy of no dividends for the current fiscal year, indicating a continued focus on reinvestment over shareholder payouts. For the full year ending June 30, 2026, Mercari upgraded its guidance, now forecasting revenue of ¥210–220 billion, up 9.0–14.2% year-on-year, and core operating profit of ¥32–36 billion, an increase of 16.1–30.6%, underscoring management’s confidence in sustained growth momentum and operational leverage.

The most recent analyst rating on (JP:4385) stock is a Buy with a Yen3651.00 price target. To see the full list of analyst forecasts on Mercari stock, see the JP:4385 Stock Forecast page.